Building A Competitive Advantage in Web3
Open in browser I’m publishing a post weekly about Social Tokens & Web3 more broadly, exploring the possibilities this new revolution is unlocking. If you find this essay interesting and want to explore more about Social Tokens, subscribe to this newsletter. Enjoy! 🔥 If you’re not a subscriber yet, here’s what you missed this month: Web3 is reinventing every aspect of businesses as we know them today. Data portability in Web3 might represent the most significant social shift in years, turning power from platforms to users. This new paradigm creates enormous opportunities for new entrants that will challenge well-established businesses more easily, but also new challenges for big companies that will have to create new moats beyond data lock-in and network effect. Because these questions will only become more important over the years for thousands of Web3 startups, I'd like to bring you through my reflection here and explore the few perspectives we already have on how those challenges will play out. Without further ado, let's get into it. 1 - The Three Pillars of Competitiveness in Collaborative EconomiesBefore starting, and because we’ll use this term often in this essay, what's a "moat"? A moat is defined as:
And let me tell you, building a moat in Web3 is much more complex than in Web2. In Web2, the world's most successful companies all had a competitive advantage. The most famous competitive advantage being the concept of “Network effect”, which consists of keeping the data behind a walled garden, making the more users coming on the platform, the more valuable the platform.
The Token Network Effect can help overcome the cold-start problem but won't change the structure of Web3 that is interoperable and composable by nature. Building a moat in Web3 is more difficult than in Web2 because we've never had digital currencies before, nor digital property rights or digital organizations built natively for the internet. Everything needs to be re-think, and there are so many more (and new) dimensions and possibilities that it's hard to know where to start. So is there anything out there that can replace the so-loved Web2 Network effect by leveraging Web3’s new capabilities? Well, I'm not smart enough to answer this question simply by myself, but luckily enough we have Twitter, and some brilliant minds have already taken the time to explore a few possibilities. For him, there are three main options:
2 - Liquidity As a |
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